What’s Up Wednesday 04/28/2021

General Tyler Hynes 28 Apr

What's Up Wednesday

Short and concise info from the last week.

Housing and Real Estate

National Bank of Canada's CEO announced late last week that plans are being considered to slow the boom of housing prices over the next few months, considerations being new regulation on banning blind bidding on homes, and potential changes to the mortgage underwriting criteria.

Economy
Economic bounce back from the second wave of pandemic lockdowns has been significantly stronger than the first wave. The Bank of Canada suggests that the first-quarter economic growth is much stronger than initially believed it would be. Also believes that the damage done to the economy due to the pandemic should be absorbed/ corrected by Q3-Q4 of 2022. Early estimates suggest that overnight interest rates may begin to rise at some point this year. Overall Canadian economy has been highly resilient to the hardships of the pandemic. CERS and CEWS benefits extended past the June 5th deadline, and still available, but the plan is to reduce and remove the benefits by September 2021.

Stress test
Stress test for uninsured mortgages (4.79% current moving to 5.25%) has been a topic from the preceding weeks, but there's been no talk on how people seeking insured mortgages would be affected. Early speculation is that those seeking a High Ratio (less than 20% down) and those that choose to continue insuring Conventional mortgages (greater than 20% down or equity) should still be able to access the current 4.79% rate.

Mortgage Implications of the CEWS on Business Owners

General Tyler Hynes 28 Apr

Mortgage Implications of the CEWS on Business Owners

What is the CEWS?

The CEWS (Canada Emergency Wage Subsidy) is an economic stimulus package for businesses and business owners that have seen negative financial outcomes and revenue losses due to the Covid-19 Pandemic.

During the pandemic, Ontario has suffered many economic hardships, which have been carried heavily by the small business owners that fuel our regional economies.

Through the CEWS the federal government has been able to stimulate the economy enough that many of our small businesses were able to stay afloat, but when it comes to the personal financial affects on the small business owners themselves, some new questions have arisen.

Let’s take a moment to explore the effects of the CEWS on mortgage applications and how it’s looked at by the lenders.

First and foremost the CEWS is considered a grant. The financial implications when it comes to a mortgage application is that the accepted funds are redacted from the overall sum of income. This is unfortunate because the CEWS in and of itself is a replacement for revenue that was lost due to the federal government having to shut down during the pandemic for public safety.

This does lower the speculative valuation of the business based on the analysis that would be completed during the application process, and does in effect devalue some companies when it comes to acquiring the right mortgage. This is a lasting affect of the CEWS that many did not see coming, and could be costly to many borrowers.

How might this cost more than the obvious devaluation? The chance that a mortgage renewal is looming may very well be a reality for some small business owners. Those that want to try for a better situation might encounter some barriers due to this, and the renewal may be more costly in terms of a higher interest rate than you want to be paying.

If you’re a small business owner in Ontario that has accepted the Canada Emergency Wage Subsidy grant, and are interested in purchasing or renewing your mortgage, apply below or call me today and we can discuss the best strategy for you to get the right mortgage!

Source: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy.html

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What is the Difference Between a Mortgage Agent and Mortgage Broker?

General Tyler Hynes 26 Apr

What is the Difference Between a Mortgage Agent and Mortgage Broker?

The differences between a Mortgage Agent and Mortgage Broker are fairly straight forward, and do not affect the ability to serve clients.

There are 5 main differences between Agents and Brokers: Title, License class, Educational focus, Supervision ability, and the ability to become a Principal Broker/ Brokerage owner.

Title:
The title difference between the 2 classifications is the most obvious of all, but can cause the most confusion. The province of Ontario and more specifically the Financial Services Regulatory Authority of Ontario (FSRA) formally know as the Financial Services Commission of Ontario (FSCO) made the decision to create the Mortgage Agent license class to ensure that the Agents are supervised by a more experienced Broker. Agents have the choice as to whether they want to update their license class to Broker or not when they are able to, and it is not mandatory to continue to serve their clients (as long as they maintain their current license.).

License class:
The class difference between the 2 licenses are strictly based on supervisory capability and general experience. A Mortgage Broker has the ability to supervise Mortgage Agents and provide guidance to them. In many cases, brokerages have policies and procedures that indicates what activities a Mortgage Agent must seek assistance from their supervising Broker.

Educational Focus:
While Mortgage Agents and Mortgage Brokers are educated on the same topics in terms of mortgage products and the ability to complete the work for their clients, the educational focus for Mortgage Brokers is heavily focused on the supervision of Mortgage Agents.

Supervision Ability:
In relation to the educational difference between the 2 license classes, and as previously mentioned, a Mortgage Broker has the ability to supervise and direct the actions of Mortgage Agents.

Ability to Become a Principal Broker/ Brokerage Owner:
The final main difference between the 2 licenses is the ability to own and operate a brokerage. A Principal Broker must hold a Broker class license to start, own, or operate a brokerage.

The differences between the license are mainly internal to brokerages, and based in provincial mandate. Mortgage Agents are more than capable to serve their clients as effectively as Mortgage Brokers, and gain value on a daily basis from their supervising brokers.

Sources:
https://www.fsco.gov.on.ca/en/mortgage/pages/education_ma.aspx
http://www.fsco.gov.on.ca/en/mortgage/Pages/education_mb.aspx